Lada Nada: Communist Car Struggles In Capitalist World

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July 5, 2011

Lada survived the fall of communism in the Soviet Union, but the automaker is struggling to stay relevant in an era of global brands and ever-increasing market penetration. Known as a blue-collar brand favored by city dwellers in the former Soviet Union, Lada is owned by OAO AvtoVAZ, which is in turn 25 percent owned by Renault SA. In the next three years AvtoVAZ will sink some $5.4 billion into Lada to modernize the companies product line and launch seven new models. Some replace cars that have been in production, with minor changes, since the early 1980s.

Today, Lada is still the dominant brand in Russia, with a with a well-established 24 percent market share. Key to their success is a well established dealer network, particularly in remote locations. Western Russia’s Voronezh region, for example, has nine Lada dealers versus just one Renault dealer. Affordability is another big selling point, and the Lada 2107 can be purchased for the equivalent of $7,300, less than half the cost of a VW Polo or a Ford Focus.

Don’t expect a lot for your money, since the Lada 2107 was introduced in 1982 and was itself a copy of the Fiat 124, built between 1966 and 1974. You won’t find electronic stability control or tire pressure monitoring systems on a Lada 2107, but the car has earned a reputation for being rugged and easy to repair, which is a key selling point when your nearest dealer may be several hours away.

Partner Renault is sharing platforms with AvtoVAZ, and will help Lada develop a low-priced plaform to replace their “Classic” series cars (like the 2107). Such a partnership will be key to Lada’s survival, as manufacturers like Ford, GM, Toyota and Volkswagen have all made Russia a target for sales growth. Still, Lada itself is an old Russian word meaning “beloved”, and the brand’s true believers (including Russian Prime Minister Vladimir Putin) aren’t likely to forsake their automobile of choice. We wouldn’t plan on seeing a Lada dealership in Des Moines any time soon, but we wouldn’t count them out in Voronezh just yet.